By Nicole Sawyer
Inauguration Day was a monumental day for the nation, an embodiment of the democratic values we believe in. Many of us breathed a sigh of relief as President Joe Biden reversed many of the harmful policies that proliferated under the former administration. During the last four years wealthy corporations have been allowed to run amok with little environmental regulation or concern.
One of the major environmental rights’ losses was on January 24, 2017 when Former President Donald Trump issued a memorandum stating, “I hereby invite TransCanada Keystone Pipeline, L.P. (TransCanada), to promptly re-submit its application to the Department of State for a Presidential permit for the construction and operation of the Keystone XL Pipeline, a major pipeline for the importation of petroleum from Canada to the United States.”When the permit was later issued to TransCanada it settled the dispute the company had filed against the United States under the North America Free Trade Agreement.
The Keystone XL pipeline project had been sidelined since 2008 during the Obama Administration, which had cited serious environmental concerns and need for further testing. In 2015, the Obama administration denied the request to begin construction after results had shown how harmful the pipeline would be to the environment and local communities. In June 2016, TransCanada filed a dispute through an international trade tribunal for 5 times the amount they had invested in the project– a total of 15 billion dollars. In its filing, the corporation claimed the denial of the permit was political rather than environmental, citing that, “Respondent knew those assertions were false.” They then went on to say that between 2008 and 2015 the “Keystone XL Pipeline would not result in a significant increase in GHG emissions.” Further claims stated that there was unfair treatment due to the “politicization” of the project and that “no other pipeline project has received the type of treatment… accorded to the Keystone XL Pipeline project.” Now, the cancellation of the permit by the incoming Biden administration invites the re-filing of that case.
President Biden issued an Executive Order on January 20, 2021 stating, “In 2015, following an exhaustive review, the Department of State and the President determined that approving the proposed Keystone XL pipeline would not serve the U.S. national interest. That analysis, in addition to concluding that the significance of the proposed pipeline for our energy security and economy is limited, stressed that the United States must prioritize the development of a clean energy economy, which will in turn create good jobs.” This is a welcome decision from the incumbent administration; however, it comes at a cost. There is evidence that TransCanada will reopen their dispute against the US now that they have lost the permit to construct and expand their pipeline. They could argue that they received unfair treatment from the back-and-forth positions on the project between the past three administrations. This is the way Investor-State Dispute Settlement has been used to extract billions of taxpayer dollars from countries around the globe.
Investor-State Dispute Settlement (ISDS) is a gray area in the world of wealthy corporations and governments. With arbitration courts, a corporation can sue a government over a lost investment. In fact, this applies to any company property that has been expropriated or any potential future profits that have been lost. ISDS states that the claimant is entitled to full and unlimited compensation if the courts determine that there was indeed a loss. In an arbitration court, there is a panel of three corporate arbitrators. In the panel, one lawyer is picked by the claimant (TransCanada), one by the defendant (the US), and the third is picked by the court; however, the arbitrator that is chosen to be the judge is chosen by the claimant (TransCanada). This means that the claimant ultimately has the most influence over how their case will be settled. As you can guess, this usually results in the corporation benefitting at the expense of the taxpayer.
This creates a serious concern for many countries who attempt to take on large private corporations. Small nations cannot afford to spend millions or billions of dollars on fighting lengthy lawsuits in ISDS arbitration courts. The laws could be rewritten or have exceptions provided, or there could be a settlement outside of court to benefit wealthy corporations over sovereign nations. It’s the government’s job to have the interest of their people at heart whereas corporations’ interest usually lies in their profit. Corporations have shown again and again that they do not value the health or well-being of people or the environment. They intend to use ISDS to undermine environmental regulations and democracy. TransCanada routinely uses the words “vocal activist constituency” and “politicization” to give the impression that the democratic processes at work were harmful to their business. They fail to recognize the environmental and social concerns that have resulted from their operations, instead focusing on the amount of money that would have been made. As more studies and results lead to policies that will help stabilize climate change, undoubtedly, more corporations will come forward and claim that they are being treated unfairly. They will claim that governments changing their minds is harmful and costs them money. Folks that do advocacy around legislation like the Green New Deal, clean fuels standard, and other environmental priorities will have to contend with possible ISDS cases for each of these pieces of legislation.
As the Biden Administration pushes ahead to embrace sustainable and environmentally safe policies, it highlights the amount of work needed to dismantle other dangerous pipeline projects. ISDS opens the door to trillions of US tax dollars to be spent on placating oil corporations and construction companies. Therefore, it is imperative that we speak out against Investor-State Dispute Settlements that allow corporations to operate with impunity from the law and regulatory bodies.
In plain words, TransCanada states that they have been wronged because this was the first time that a pipeline project was denied. There will be many firsts as we blaze new trails in clean and sustainable infrastructure and energy. We can’t let “the firsts” be the reason that we discontinue our path toward a cleaner and more sustainable future. We cannot afford to keep walking on eggshells around wealthy corporations who have proven time and time again, their only concern is the bottom line. Here’s the bottom line: you have to break a few eggs to make an omelet. As we forge ahead, we will have to go back on promises to corporations as new information comes to light, we will have to change and improve our longstanding policies.We must put the climate above corporations; we cannot stop our fight against climate change to pay out billions of dollars to corporations who refuse to innovate and accept new policies.